United Airlines CEO saw 2012 pay shrink 41 percent

United Airlines CEO saw 2012 pay shrink 41 percent

The CEO of United Airlines saw his total 2012 compensation shrink 41 percent last year after stumbles in the airline's merger with Continental.

Compensation for Chairman and CEO Jeff Smisek was $7.9 million last year, down from $13.4 million after a cut in his incentive payments.

A securities filing on Friday said United executives met enough of their financial goals to trigger some incentive payouts. But those payouts shrank.

The directors who consider pay at Chicago-based United Continental Holdings Inc. took into account the carrier's operational problems over the busy summer months, and the toll they took on its finances. The company lost $723 million last year.

Shareholders did better last year. United Continental stock rose 24 percent in 2012.

Integrating two big airlines is complicated, and the work still isn't done - only its pilots have a combined union contract covering those from both airlines.

Smisek had been CEO of Continental before the 2010 merger. He has apologized for the troubles and has made several moves aimed at getting the airline back on track.

His base pay for the year was unchanged at $975,000. But the value of his stock awards fell to $3.1 million, from $7.5 million in 2011. And non-stock compensation pay dropped to $3.5 million, from $4.4 million a year earlier.

The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest that the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive's stock and option awards for 2012 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.

The company said it would hold its annual meeting on June 12 in Arlington, Va.